The paper analyses optimal taxation of corporate profits when governments can choose both the rate and the base of the corporation tax, but are constrained to collect a given amount of corporate tax revenue. In a standard two-period model of investment and international mobility of portfolio capital only, the optimal tax system allows a full deduction for the costs of capital (cash-flow taxation). When foreign direct investment is permitted, however, and firms can shift profits between countries through transfer pricing, it will be optimal for easch government to distort investment decisions in order to reduce tax rates and limit the incentive for profit shifting. This result conforms with recent reforms of corporate tax systems, which have generally reduced tax rates while broadening tax bases.
Download Info
To our knowledge, this item is not available for
download. To find whether it is available, there are three
options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page
whether it is in fact available.
3. Perform a search for a similarly titled item that would be
available.
Publisher Info
Paper provided by Norwegian School of Economics and Business Administration- in its series Papers with number
1/99.
Length: 24 pages Date of creation: 1999 Date of revision: Handle: RePEc:fth:norgee:1/99
Contact details of provider: Postal: NORWEGIAN SCHOOL OF ECONOMICS AND BUSINESS ADMINISTRATION, HELLEVEIEN 30, 5035 BERGEN SANDVIKEN NORWAY. Phone: 5595 9000 Fax: 5595 9100 Email: Web page: http://www.nhh.no/ More information through EDIRC
For technical questions regarding this item, or to correct its listing, contact: (Thomas Krichel).
Find related papers by JEL classification: H2 - Public Economics - - Taxation, Subsidies, and Revenue H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
Cited by: (explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.) This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page.